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Hong Kong Construction Peaks & Troughs: What’s Coming?

Over the last few decades Hong Kong’s construction market has seen strong growth and continues to remain one of the leading cities for new major construction projects. However, during this growth period we have also seen peaks in construction outputs which are often followed by a downturn in construction activity. These periods could be described as peaks and troughs. During recent years we have seen 2 major peaks in construction activity driven by major projects, and a further construction peak appears to be on the horizon. They can be summarised as follows:

PAST > Construction of Chep Lap Kok Airport and the 10 Airport Core Projects
CURRENT > 5 Major MTR Railway Extension Projects
FUTURE > Construction of the 3rd Runaway and Associated Infrastructure at Chep Lap Kok Airport

 

Let’s take a look at each of these periods in more detail and the projects which have helped shaped the construction industry we see in Hong Kong today.

PAST: Construction of Chep Lap Kok Airport and the 10 Airport Core Projects

By the time Kai Tak Airport was nearing its full capacity plans were already well underway for a new airport and in 1989 Chep Lap Kok Airport (CLK) was given the go-ahead. In order to ensure the success of the new airport, 10 Airport Core Projects were earmarked for implementation along with construction of the new airport itself. These included:

1

Airport (including formation of the airport island and the construction of the Terminal Building)

HK$65 Billion

2

Tung Chung New Town

HK$6 Billion

3

North Lantau Expressway

HK$10 Billion

4

Airport Railway

HK$28 Billion

5

Lantau Fixed Crossing (including the construction of the Tsing Ma Bridge, Ma Wan Viaduct and Kap Shui Mun Bridge).

HK$12 Billion

6

Route 3 (Kwai Tsing Section including the construction of the Cheung Tsing Tunnel and a 6.5km elevated expressway)

HK$10 Billion

7

West Kowloon Reclamation

HK$6 Billion

8

West Kowloon Expressway

HK$8 Billion

9

Western Harbour Crossing

HK$6 Billion

10

Central Reclamation

HK$4 Billion

Total costs for the Airport Core Project were around $155B (as per 1997 price)

The new airport – besides meeting the air transport needs in the coming decades, also helped Hong Kong to become the major transportation hub within Asia that we see today. The land formed in vicinity of the airport also provided opportunity for some strategic developments such as trade and exhibition facilities.

With total of investment of around HK$155 Billion the airport construction and associated projects created 1000s of new jobs for construction professional. Due to the large number of ongoing projects at one time the local labour market simply didn’t have enough skilled professionals to undertake the work, this created numerous international construction jobs and saw a significant number of expatriate workers move to Hong Kong in the 1990s. Engineering, Construction Management, Commercial Management and Quantity Surveying roles were easily obtainable during this period for suitably skilled expats looking to find work in Hong Kong. Many of these people stayed in Hong Kong for a number of years and some are still here today having made Hong Kong their permanent home. The Chep Lak Kok Airport development still stands out today as one the largest construction projects undertaken in Hong Kong’s history.

CURRENT: 5 Major MTR Railway Extension Projects

As Hong Kong’s population continued to grow in the 2000s the public transport networks began to reach their capacity. In early 2010 construction began on 5 news major MTR extension projects to help ease the pressure on the current rail networks and cope with future demand. These expansions would add up to a further 56km to the existing rail network along with over 17 new stations. The construction of these projects includes various aspects of works including: tunnelling, stations, E&M, roads, retail and various other facilities located within and around the new MTR stations. The projects included:

1

Shatin to Central Link (SCL) – 17km

2

West Island Line (WIL) – 3km

3

Express Rail Link (XRL) – 26km

4

South Island Lone (SIL) – 7km

5

Kwun Tong Line Extension (KTE) – 3km

A number of these projects are still ongoing today and total costs are expected to be in excess of HK$100 Billion

Similar to the period in the 90s during the construction of CLK Airport this wave of 5 major MTR extensions created 1000s of new jobs and again we saw the influx of expatriates moving to Hong Kong to undertake positions on these projects. During the period of 2012 – 2015 we have seen staffing levels peak having placed various candidates in Quantity Surveying, Commercial Management, Engineering, Construction Management and other technical roles with both contractors, consultancies and client side roles. Although the peak construction period for these projects has now passed we are still seeing a strong demand for skilled professionals to work on these projects. The 2 areas we are finding most in demand include skilled Cantonese professional to help replace departing expatriate workers who have decided to move away, and skilled claims/delay professionals to help manage the significant delays and associated claims we have seen in recent months for some of these projects, most notably the Express Rail Link project. As with the CLK Airport project the most recent MTR extension projects have provided a springboard for the continued growth of the construction industry in Hong Kong.

FUTURE: Construction of the 3rd Runaway and Associated Infrastructure Works at Chep Lap Kok Airport

As the current wave of MTR projects begin to complete and we see the current peak construction period begin to tail off we can already see the next potential major construction project to help drive another boom period, the 3rd runway development at CLK International Airport.

To cope with future air traffic growth, the Airport Authority (AA) has been planning to expand Hong Kong International Airport into a three-runway system (3RS) since 2008. The 3RS will involve 7 significant construction works:

1

Reclamation of approximately 650 hectares of land north of the existing airport island

2

Building a new passenger concourse with more than 280,000 square metres of floor area

3

Building a 3,800-metre-long new runway and its supporting taxiway systems.

4

Building a 2,600-metre-long new Automated People Mover (APM) system connecting Terminal 2 with the new passenger concourse

5

Building a new Baggage Handling System (BHS) linking Terminal 2 with the new passenger concourse

6

Expansion of the existing Terminal 2 into a full-service processing terminal and construction of an associated road network.

7

Construction of other associated airport support infrastructure, facilities and utilities for 3RS operation.

The scale of the new 3RS project is virtually as big as building an entirely new airport next to the existing one. The total estimated construction cost is HK$141.5 billion and is expected to take 8 years to complete.

It a recent survey with over 400 different companies and organisations operating on the airport island in 2013 and of the airport’s 65,000 staff, around 65% are engaged in skilled jobs. Expanding the airport into a 3RS will continue to provide enormous job opportunities in construction and other related sectors. As of 2016 the 3rd runway project is very much on the agenda as the next major construction project to be undertaken in Hong Kong

If you’re interested to learn more about future projects or job opportunities in Hong Kong please get in touch. We’d also love to hear from you if you’re looking to change jobs at the moment as we have various opportunities working on major MTR extensions and other large scale infrastructure projects that would be suitable for both expatriate and local Cantonese candidates alike.

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Tim Cole
Senior Recruitment Consultant – Hong Kong & Asia

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